Correlation Between Dow Jones and J Resources
Can any of the company-specific risk be diversified away by investing in both Dow Jones and J Resources at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dow Jones and J Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and J Resources Asia, you can compare the effects of market volatilities on Dow Jones and J Resources and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dow Jones with a short position of J Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and J Resources.
Diversification Opportunities for Dow Jones and J Resources
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dow and PSAB is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial and J Resources Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Resources Asia and Dow Jones is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dow Jones Industrial are associated (or correlated) with J Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Resources Asia has no effect on the direction of Dow Jones i.e., Dow Jones and J Resources go up and down completely randomly.
Pair Corralation between Dow Jones and J Resources
Assuming the 90 days trading horizon Dow Jones is expected to generate 5.57 times less return on investment than J Resources. But when comparing it to its historical volatility, Dow Jones Industrial is 5.7 times less risky than J Resources. It trades about 0.11 of its potential returns per unit of risk. J Resources Asia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 8,500 in J Resources Asia on September 2, 2024 and sell it today you would earn a total of 21,700 from holding J Resources Asia or generate 255.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 96.24% |
| Values | Daily Returns |
Dow Jones Industrial vs. J Resources Asia
Performance |
| Timeline |
Dow Jones and J Resources Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
J Resources Asia
Pair trading matchups for J Resources
Pair Trading with Dow Jones and J Resources
The main advantage of trading using opposite Dow Jones and J Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones position performs unexpectedly, J Resources can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in J Resources will offset losses from the drop in J Resources' long position.| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
| J Resources vs. Merdeka Copper Gold | J Resources vs. Golden Eagle Energy | J Resources vs. Rukun Raharja Tbk | J Resources vs. Wilton Makmur Indonesia |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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